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Misunderstanding the option

04 September 2012
Issue: 4369 / Categories: Tax cases , VAT
Atchem Ltd (TC2064)

The taxpayer company registered for VAT with effect from March 2004.  It acquired a shop in May 2008 as an investment property which came with a tenant in place. The seller had opted to tax the property.

On the basis the taxpayer as the buyer would also make a VAT option the sale was treated as a transfer of a going concern and no VAT was charged on the price.

The company collected rent from the tenant but did not charge VAT or account for the tax to HMRC until February 2011.

At a routine VAT inspection the Revenue asked to see evidence that the taxpayer business had opted to tax the property to support the treatment of the sale as a transfer of a going concern.

The company submitted a late application in December 2010 to opt to tax the property asking...

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